DoE still not ready for open access for large power users by yearend

MANILA, Philippines — The Department of Energy (DOE) admitted that it has been having a hard time meeting all the necessary requirements and putting in place infrastructure in time for December 26, the date set by the Energy Regulatory Commission (ERC) for the start of the open access and retail competition regime.

Energy Secretary Jose Rene D. Almendras said it would be “very challenging” to implement the open access regime by yearend since “we need to put rules, put systems, put infrastructures, you need to bid out contracts, who will bring the meters, what’s the meter standards—these are concerns that have yet and need to be threshed out.

“There are still problems and challenges for which I’m still looking for solutions. We’re looking for solutions to these challenges that will need time and resources,” he said, adding that they did not even have an idea as to how much they would need to invest in the new infrastructure. The implementation plan, he said, has not been finalized.

According to Almendras, the DOE is currently discussing with the ERC the issue of who will serve as the interim open access settlement agent, which will handle the operations of the market under the open access regime. Among those being considered to handle the central registry are the Philippine Electricity Market Corp. (PEMC), operator of the wholesale electricity spot market in Luzon and Visayas.

The energy chief said that PEMC might run into some problems if indeed it would be tapped to handle the central registry for the open access and retail competition regime.

“It’s difficult enough to do the spot market. We’re even having problems with the PEMC system right now. We need to enhance the existing software and build new software to be more effective,” he said.

Almendras, however, declined to say what he thought to be a realistic target in implementing open access, adding that the DOE respected the target set by the ERC. He stressed that the ERC and the DOE “have to work together to put these things in place to implement open access and retail competition.”

Industry players, including the Philippine Independent Power Producers Association (Pippa) have been expecting the open access to be finally implemented within a year or year and a half, given the need to complete the requirements in making the scheme viable, Pippa president Ernesto Pantangco said in a previous interview.

In its decision dated June 6, the ERC allowed large electricity users in Luzon and Visayas to choose their own power suppliers under an open access regime, starting December 26, 2011.

All electricity end-users with an average monthly peak demand of 1 megawatt for the 12 months preceding December 26, 2011, as certified by the commission to be contestable customers, shall have the right to choose their own electricity suppliers and are, thus, enjoined to exercise such right to their full benefit.

Under this open access system, large power users will initially be able to choose their own power suppliers. Eventually, households will have the capacity to choose as well. This set up is unlike the current system in which consumers are limited to the suppliers that have jurisdiction over their respective areas.

The open access regime is expected to further encourage competition among power industry stakeholders, resulting in fair electricity prices.